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Schneider was born in Crailsheim in Germany, and trained in medicine in Berlin and Tübingen. He was drafted for military service in World War I and later obtained a postgraduate qualification in psychiatry. In 1931 he became director of the Psychiatric Research Institute in Munich, which was previously founded by Emil Kraepelin.

Disgusted by the developing tide of psychiatric eugenics championed by the Nazi party, Schneider left the institute and served as an army doctor during World War II. After the war, anti-Nazi academics were appointed to serve in, and rebuild Germany's medical institutions and Schneider was given the post of Dean of the Medical School at Heidelberg University. Schneider kept this post until his retirement in 1955.

Schneider was concerned with improving the method of diagnosis in psychiatry. Like Karl Jaspers, he particularly championed diagnoses based on the form, rather than the content of a sign or symptom. For example, he argued that a delusion should not be diagnosed by the content of the belief, but by the way in which a belief is held.

He was also concerned with differentiating schizophrenia from other forms of psychosis, by listing the psychotic symptoms that are particularly characteristic of schizophrenia. These have become known as Schneiderian First-Rank Symptoms or simply, first-rank symptoms.[1]

The reliability of using first-rank symptoms for the diagnosis of schizophrenia has since been questioned,[2] although the terms might still be used descriptively by mental health professionals who do not use them as diagnostic aids.

A memory device that is frequently used to remember the first rank symptoms
is ABCD: Auditory hallucinations, Broadcasting of thought, Controlled thought (delusions of control), Delusional perception.